One of the first lessons every small business learns is the lesson of rejection. Whether it is the customer who isn’t interested, the new product line that doesn’t catch the market at the right time, or the supplier who resists negotiating better terms, rejection is part of all aspects of the business. Persevering through rejection is what sets successful entrepreneurs from the pack. However, there is something more personal for many small business owners when the bank declines their request for a small business loan. While this can be discouraging and frustrating, there are steps you can take to get the working capital you need to succeed.
You’ve Been Declined, What’s Next?
If you’ve been declined for a small business bank loan, rest assured you’re not the first, and you won’t be the last, so don’t get discouraged. The important thing to remember is that every rejection is an opportunity to learn from the experience and explore other options.
Here are some steps you can take after getting declined for a small business loan:
Get Feedback from Your Loan Officer
Your loan officer can be a wealth of information and can give you specifics on the reason why you were declined. Ask the loan officer why you were declined and what the bank looks for when approving loans. It is usually a combination of your credit score, your sales history, and the amount of time you have been in business, but other factors can also play a role so gather as much information as you can.
Improve Your Business Credit Score
Much like a personal credit score, your business also has a credit score that impacts its ability to qualify for credit and loans. You can obtain your business credit report and credit score from Experian, Equifax, or Dun & Bradstreet. Be sure to review your detailed business credit report and take actions to correct any mistakes that could be impacting your score.
In addition, get in tune with your overall credit utilization. A business that is maxed out on multiple business credit cards is generally not considered a good risk for most banks. To improve your score, be sure to make all of your debt payments on time and try to pay down your existing debts.
Evaluate Other Funding Opportunities
Small business financing is not limited to traditional banks. Since traditional banks have stricter lending limitations, and have been slow to lend to small businesses after the 2008 financial crisis, more and more small businesses have been exploring alternate funding opportunities including options from online marketplaces, peer-to-peer lending sites, and non-traditional lenders, like Breakout Capital. With flexible lines of credit and faster approval processes, alternative lenders can be a great fit for small businesses in need of quick working capital solutions.
Like with any financial partnership, it’s important to partner with a lender who is focused on the long-term health of your business, not just closing the deal. The right lending partner will offer you the best solution for your situation – and continue to work with you as you grow to keep your business on the right path. A long-lasting partnership with the right non-traditional lender can put your business on the fast track to financial success since they may be able to be more flexible in payment schedules, offer term improvement or graduation rates, and accommodate to the needs of your growing business.
Discover Opportunities to Improve
Every rejection is an opportunity to uncover new ways to succeed. If a bank rejects your business loan application, you can take steps to make sure the next application is approved, and you can seek alternative sources of funding from non-traditional lenders who may even be a better fit for your working capital needs.
Breakout Capital is committed to responsible funding. We’re seeking to partner with small businesses interested in long-term success, and we believe we succeed when you succeed. We get to know our clients, their operating challenges, and their goals before making working capital recommendations that include small business loans, business cash advances, consolidations, and other custom solutions. Please contact us today if you’d like to learn more, or partner with us for working capital solutions.